I can count on two hands and all of my toes (and beyond) the number of people who sat in my office and said, “I wish I’d saved more for college.”
I spent 12 years in college admission, and during this time, I heard hundreds of situations — families who had regularly saved money for college, people who hadn’t saved a penny, families who had sporadically saved over the years.
I heard, “We’re set!” to, “We were worried about the bills. We always said we’d eventually put money away for college but never did. Stuff just kept coming up — a new kitchen, a few vacations to Disney, and now, the kids are ready to go off to college. We haven’t saved a dime.”
(Don’t feel guilty if the second example sounds like you!)
Here’s the basic secret I discovered among the people who were successful at saving for college and education planning: They’d saved a little bit and invested it every month. That cumulative effect meant that they felt comfortable paying for college. They didn’t have a master’s degree in college financial planning. They automated everything.
What is Automated Investing for Education Planning?
Automated investing is just that — you set up your child’s college savings account so money goes directly into it each month. In other words, you put your money and your savings on autopilot. It’s one of the easiest ways to save for college.
You’ve heard of this method — it’s often called the “pay yourself first” method of investing. It’s extremely effective because you learn to expect the payment (which you can set for a particular day of the month). It becomes a normal part of your monthly expenses, 12 times a year.
How to Get Started Automating College Savings
During my years in admission, I noticed that one of the hardest things for parents to do was to just get started investing for college.
Families would relay to me, “I just wasn’t sure what to do. We didn’t start at all because we didn’t know where to put our money.”
Totally understandable! Here are three simple steps to get going.
Step 1: Choose an investment type.
You can find a dizzying array of college savings plans, investment types and companies that tout that they have “better savings options” and “fewer fees” than the competition. It’s great to do your own research, but when push comes to shove, it’s best to just make a decision so you’re actually doing it. You can always move your money later!
Let’s take a look at a few popular college savings plan options.
529 Plans
529 plans are college savings plans sponsored by a state or state agency. You can use these accounts, which grow tax-free, to pay for tuition, books and other qualified expenses. Your state often offers tax benefits for a large number of account types. When you take the money out of your 529 plan to pay for college, you won’t pay taxes as long as you use the money for qualified expenses, like tuition, room, board and school-related fees. (If you buy a car with the money, you’ll face a tax bite.)
Custodial Accounts
Through a savings account at a financial institution or brokerage firm, you can invest money in a custodial account, a type of account set up for adults to invest for minors. Custodial accounts have longer, fancier names: the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). The state in which you live determines whether you invest in a UGMA or UTMA. The state also determines the age in which your child can take out the money — usually 18, 21 or 25. Custodial accounts offer tax advantages and have no income or contribution limits or withdrawal penalties.
The drawback to a custodial account is that your child can take the money out and spend it however he or she wishes. That means your child can use the money to buy a car or take an expensive trip.
Coverdell ESAs
A Coverdell ESA is a tax-deferred trust that you can open at a brokerage or other financial institution. It helps families by offering tax-free earnings growth and tax-free withdrawals on qualified educational expenses.
However, you do face some caps: You can only make annual contributions up to $2,000 for joint filers with a modified adjusted gross income (MAGI) up to $190,000. The options are reduced for a MAGI between $190,000 and $220,000. You cannot contribute to a Coverdell ESA if your income rises above $220,000.
Stocks or Mutual Funds
You may bypass “specified” college savings accounts and invest directly in stocks or mutual funds. Stocks represent an ownership share of a company. One stock represents one share of a company.
Mutual funds, on the other hand, refer to many investors who pool their money together to invest in bundles of securities. Mutual funds offer a more diversified investment than stocks, which offer more risk individually. Rather than putting all your eggs in one basket, mutual funds allow you to spread the risk around.
The downside to investing in stocks or mutual funds is that they don’t offer tax incentives strictly for education.
Roth IRAs
You may recognize a Roth IRA as a retirement vehicle — just as its name indicates. (IRA stands for “individual retirement account.”) However, you can withdraw from a Roth IRA in order to pay for qualified educational expenses tax-free.
The downsides: If you’ve had the Roth IRA for less than five years and you withdraw not just the principal amount contributed but also the earnings to pay for college, you’ll owe taxes on those earnings. In addition, pulling money from your retirement account means that you could inadvertently penalize yourself by neglecting your own retirement savings.
In order to contribute to a Roth IRA, your MAGI must be less than $129,000 if you’re single. If you’re married and filing jointly, you cannot go over $204,000. You can contribute a maximum of $6,000 to a Roth IRA if you’re younger than age 50. If you’re 50 or older, you can contribute an extra $1,000 per year in “catch-up” contributions.
I get it: Choosing an investment type is easier said than done. However, remember that taking some action is better than doing nothing at all.
Step 2: Set up automatic contributions.
Similar to direct deposit from your paycheck to your bank, you want to make sure money automatically goes from your bank to your investment account.
You can swiftly set up automatic withdrawals through your brokerage account, your state’s 529 plan site or other type of financial account. Choose a dollar amount to go into your account every month. Next, set up the automated deposits based on your paydays or a monthly contribution schedule. For example, you may choose to contribute $500 every month to your child’s 529 plan on the 15th of every month — or another day you get paid.
Some employers offer payroll direct deposit into a 529 plan account. Find out if your state’s 529 plan allows this.
Step 3: Monitor your success.
One of the best parts of automating your college savings involves watching it grow. You may want to change your action plan based on a college savings calculator, such as the college savings calculator from Fidelity. A college savings calculator can help you determine whether you’re on the right path.
Why not start out with a college savings calculator in the first place? Well, to be honest, it’s best to get started with a monthly amount you can afford rather than giving you the heebie-jeebies about how much college might cost in 18 years or less.
It’s best to save as much as you can, as often as you can. Your child may have to get student loans, and that’s okay. Right now, feel content that you’re doing as much as you possibly can.
Automate Now to Benefit Later
One more not-so-secret secret: Many plans will let you contribute as little as $25 per month. If you can afford $25 worth of candles at Target (I’m totally guilty!) you might be able to kick $25 toward your child’s college education.
In my experience, it’s about building up the confidence to invest and realizing that yes, you can do it. It just takes a little investigation on your part. Once you get going, setting up automatic investments and celebrating your wins becomes second nature.
If you’re thinking, “No way can I decide alone! I need help with this stuff,” you’re not alone.
Consider getting the advice of a local financial advisor. A fiduciary financial advisor (one who puts your best interests at heart) can also help you make your savings automatic. Trust me, you’ll feel great about taking this next step.
College tuition costs continue to rise. Parents often struggle to manage the costs even with substantial financial aid, and students are (justifiably) fearful of the debt they’ll amass trying to pay their own way. The hope of course is that action will ultimately be taken to reduce student debt burdens and lower the cost of college. For the time being though, lots of families need to find creative solutions — including parents adopting side hustles to pay tuition.
Benefits of Side Hustling to Help You Save for College
Chances are, if you’re familiar with the term “side hustle,” it’s primarily with regard to young adults working full time for the first time. These days, we often expect young people to be working “day jobs” and “side hustles” simultaneously as they look to save up money and establish financial independence. But this isn’t the only use for a side hustle. It can also be a worthwhile venture for a mom — and perhaps a single mom in particular — looking to manage college tuition costs.
Usually, conversations about managing those costs begin with talk of savings, and this is perfectly logical. If you’re a mom hoping to pay for some or all of your child’s (or children’s) tuition costs, you should be looking for ways to save. If you start early, you can take advantage of a variety of methods that help to build on savings over time, and ultimately establish very useful funds that can be applied to tuition checks when the time comes. At the same time though, savings options do fundamentally draw money from your existing income. They are effectively costs that affect your bottom line, perhaps for years at a time.
This speaks to the key benefit of adding a side hustle to your tuition plans. While savings drain your core income, a side hustle provides you with extra income — allowing you to make additional money that you can funnel directly toward payments (or perhaps directly into a savings account, deepening on timing and arrangements). Of course, a side hustle still requires time and effort. But it’s fair to think of it as a way to make extra money for tuition, rather than to further drain the core income you depend on as a working mother.
The other key benefit, as we just alluded to, is that by generating extra income, you may be able to add generously to a savings account or similar, stable investment that can appreciate over time. If, for instance, you are managing a 529 plan for college costs, the money within that plan grows by a small percentage each year. Funneling side hustle earnings into the plan gives you more money that can appreciate over time, rather than just more raw funds.
Now that we’ve covered some of the benefits of side hustles for moms looking to manage college tuition costs, let’s look at some of the best specific jobs worth considering.
Side Hustle 1: Crafting
With so many ways to sell goods online today, a lot of moms will develop profitable side hustles simply making and selling their own goods. Whether that means homemade tee shirts, jewelry, household decorations, or Christmas ornaments, if the products are well made they can be sold online.
Side Hustle 2: Blogging
It takes strategy and diligence to make a profitable blog. But if you know what to write, you speak to a particular audience, and you learn some SEO basics, you can generate enough attention to make some money simply writing in your free time.
Side Hustle 3: Proofreading
Students and professionals alike are always in need of proofreading services, and today you can easily link up with clients for this kind of work through freelancing sites online.
Side Hustle 4: Transcribing
Like proofreading, transcription services are always in demand on freelance platforms (such as Upwork and others like it). It tends to be easy work to perform in free time, and while pay isn’t lucrative, it does add up.
Side Hustle 5: Taking Paid Surveys
There are all sorts of opportunities to answer paid surveys, and some of them take only minutes at a time. This is a job a working mother can do in a carpool line, at the park while younger kids play, etc.
Side Hustle 6: Selling Art
This is a terrific side hustle for working moms who happen to have a talent for art, naturally. But here again, the internet and social media have made it much easier to sell valuable work. In time, a mother with talent in this space can even develop what is essentially a personal business, generating more and more meaningful income as attention and appreciation for the work spread.
Side Hustle 7: Selling Photos
Everything we just noted regarding art applies to photography, for those who have more skill in this area. Here too though we’ll also note that stock photo sales can make for a handy side hustle, because profits can be generated for work already done. That is, even if you’re only making $1 per download on a photo, those dollars may keep coming in for months or years.
Side Hustle 8: Selling Baked Goods
For those moms who have a talent for baking (or making any sort of treat, really), there is also some potential to generate meaningful side income. Whether through online or local sales, there’s always a market for tasty goods!
Side Hustle 9: Testing Products
Numerous services exist that help to pair willing participants with product-testing opportunities, both digitally and in person. Simply by trying out a product in your own time and offering your thoughts on it, you can earn some decent payments.
Side Hustle 10: Secret Shopping
Once in-person shopping returns to a normal activity level (after the pause of 2020), secret shopping will be an option that some will actually have fun with. This is basically a practice by which a company will pay people to browse through its stores and report on the quality of the service.
Side Hustle 11: Altering Clothing
This is another option in the craft and artistry department. But for moms who are skilled with alterations, there is always the option of setting up a part-time local business.
Side Hustle 12: Tutoring
Tutoring is an excellent part-time option that can sometimes involve fairly appealing rates. Sometimes online but particularly in person, a skilled tutor can reasonably ask for $50 an hour or more.
Side Hustle 13: Assisting With Test Prep
This is very similar to tutoring. But for those moms who want more guaranteed business, test prep is a sort of tutoring niche that makes for a great side hustle. There will always be kids seeking help with standardized testing, and helping them with the process is both rewarding and profitable.
Side Hustle 14: Teaching Private Lessons
It’s a broad category, but teaching a skill — be it in music, sports, art, etc. — is also an excellent side hustle. Here, as with tutoring, $50 or more per hour is a reasonable ask, meaning the extra funds can really add up.
Side Hustle 15: Teaching Online Courses
In a similar vein to tutoring and teaching private lessons, moms with expertise in certain subjects also have the option of setting up full online courses. This can take a fair amount of work, as it involves conveying expertise and doing the marketing work that will attract paying students or subscribers. But the real appeal is that a well-made online course can be used repeatedly to generate more profits from new students.
Side Hustle 16: Personal Training
For moms with experience in fitness, personal training is also an excellent option. Particularly if there’s an opportunity to take on a few client at one time, side income from an activity like this can quickly add up.
Side Hustle 17: Coaching or Refereeing
Moms who enjoy sports can also have a little bit of fun with a local side hustle participating in youth sports. At parks and community centers and the like, there is often a need for children’s team coaches or referees. These can sound more like demanding jobs, but the truth is they usually involve just a few hours’ work each week.
Side Hustle 18: Web Design
Web design is always in demand, and a mom with particular skill (and a track record or examples to prove it) can command very competitive rates in this department. Whether through a personal website advertising services or through freelance platforms, regular, high-paying side work can be generated.
Side Hustle 19: Accounting
Accounting can be a little trickier than some of these options in that you’ll typically need qualifications to get good, paying work. At the same time though, a working mother today has the option of pursuing an online accounting degree today, and acquiring those qualifications cheaply and affordably. This can lead to substantial income through remote, freelance accounting work for companies in need.
Side Hustle 20: Tax Advising
As with accounting, tax advice is something people tend to look to the experts for. However, if you can prove understanding and capability — and offer more competitive rates than professional CPAs — it is possible to generate good business. Plus, a mother who does good work advising others on taxes can quickly accumulate referrals and good reviews that in turn lead to more business.
Side Hustle 21: Social Media Management
Businesses today need to maintain social media activity to remain competitive, and a lot of them are looking for help doing it. Finding even one company that will pay to have its accounts maintained can make for a very profitable side hustle
Side Hustle 22: Babysitting
This idea more or less speak for itself. But for mothers who may have a few hours to spare in a given week, it’s still a great side hustle option.
Side Hustle 23: Pet Sitting
Even more manageable than babysitting is pet-sitting! Particularly for moms who may work at home, taking on a pet or two to help out a neighbor or friend can result in what is almost passive income. A few walks and feedings are easy enough in exchange for a nice chunk of change
Side Hustle 24: Driving An Uber (or Lyft)
Driving for ride-sharing services has become a very popular side hustle. Not all moms will have the time or flexibility for something like this, but those with older kids may be able to work in a bit of of driving in early evenings or on the weekends. The money isn’t lucrative, but it does add up.
Side Hustle 25: Driving for Delivery Services
It’s difficult to say whether or not delivery services will remain as popular once the pandemic is behind us (this article being written in early 2021). But for the time being, driving for grocery and product deliveries (through services like Postmates, DoorDash, etc.) is a nice, easy way to earn some extra cash.
Side Hustle 26: Cleaning Homes
For those moms who don’t mind the work (or even enjoy tidying things up), cleaning others’ homes is always an option too. It’s not at all unreasonable to charge $100 or more for a few hours of cleaning, such that even doing this a few times a month can add up to a nice bit of side income.
Side Hustle 27: Doing Yard Work or Gardening
For moms who love to be outside, or enjoy working on gardening and landscaping, this is one side hustle that can be the best of both worlds! Lots of people will pay handsomely to have their yard and gardens spruced up, particularly for those moms who will offer more competitive rates than larger landscaping services.
Side Hustle 28: Becoming a Virtual Assistant
This is a relatively new concept in the side hustle world, but one that can provide quite a lot of reasonably well-paid work. Ultimately, tasks for virtual assistants can range from managing appointments, to doing remote reception duty, to arranging travel, and more. But the general idea is to become an all-purpose virtual go-to for a given company’s need during defined hours.
Side Hustle 29: Work as a Doula
The work of a doula can seem like professional medical care at times, but the truth is you do not actually need certification or a degree to perform this role. It might be reassuring to clients of course, but it is possible for a mom seeking a side hustle to step right into doula work. It won’t be the most regular work, but it’s rewarding and profitable, and can of course be done alongside other side hustles.
Side Hustle 30: Renting Out Your Car
Just as Airbnb has enabled people to rent out their homes, there are now services that temporarily rent out cars as well. For any mom with the flexibility to manage this, it can be an excellent opportunity for passive side income.
Side Hustle 31: Brewing Coffee
This is an idea for which it’s important to be careful about weighing costs versus profits. But the opportunity to brew one’s own coffee can be quite a lot of fun, and can even result in something of a home business. Sourcing beans, working out a specific recipe or gimmick, and marketing fresh-brewed coffee locally is side hustle some moms will enjoy exploring.
Side Hustle 32: Life Coaching
Life coaching may be somewhat vague, but it’s also a fairly in-demand service. For those moms who feel they can inspire or motivate, or who have personal stories of overcoming obstacles in life, it’s certainly another option to explore.
Side Hustle 33: Writing Books
Writing a book takes a lot of work, and can certainly become a full-time job. However, thanks largely to self-publishing options and online sales avenues, a lot of people find that they can generate relatively modest profits on simpler projects. That might mean writing a personal guidebook regarding a given experience or skill; it might mean penning an original children’s book. Whatever the case, if it goes well it can result in at least a few thousand dollars to put toward a college fund.
Side Hustle 34: Illustrating Books
Similarly, some moms with a talent for drawing or graphic design may also find work illustrating books. A lot of authors ultimately wind up seeking illustration help, either for covers or for pictures within books, and some of hem (or in some cases their agents) will pay well for the help.
Side Hustle 35: Starting a Podcast
Podcasts aren’t easy to make a lot of money on, but they can generate some profits through subscriptions, patronage, or even ads. So moms with good ideas in this department may as well give it a shot!
Side Hustle 36: Starting a Food Truck
This is a little bit more of a side business than a side hustle. And as with brewing coffee, it’s an idea with which it’s important to measure costs versus revenue to ensure profitability. For a mom with a talent in a certain area of cuisine though, starting a food truck can produce meaningful side income.
Side Hustle 37: Performing in Public
Working as a performer — be it through music or something similar — is also a good way to bring in some cash now and then. On a busy city sidewalk or in a town public square, a talented performer can sometimes gather anywhere from $20 to $50 in an hour of work!
Choose the Right Side Hustle
So there you have some interesting ideas! Choosing the right side hustle for you will of course depend on your own talents, abilities and circumstances. But hopefully the breadth of suggestions above inspire you to give it some thought. You can choose from all kinds of side hustles for moms that can help with college costs. Some of them are even enjoyable or rewarding as well!
Many students require financial support through a third party to fund their education. The financial help might come from a scholarship, from you (thanks, Mom!) or student loans.
Confused between private vs federal student loans for college? Worried you’ll make mistakes as you try to choose the best option for your child?
That’s understandable — it’s important to consider various factors and choose the best combination of those types of aid. Both options work differently and have limitations, risks and benefits. They also have specific criteria which you need to fulfill before getting approved for the loan. Before borrowing, make sure you have a complete understanding of the chosen student loan option and its terms.
Guess what!! We’re here to put a spotlight on this matter and explain each of the student loans and the difference between these two loan types. Understanding the difference will help you choose the perfect student financing option for your kids.
Private loans offer a higher borrowing limit compared to federal student loans. Your child can get private student loans from different sources such as credit unions, private banks or other financial companies.
Your child likely doesn’t have a decent credit history so may need a cosigner to get a private student loan. If you, as the parent, are the cosigner, you must offer a credit check to prove your creditworthiness.
Kids may use a private student loan to pay for any expenses, including college tuition fees, room and board, textbooks, laptops or computers, transportation costs and living expenses.
Private student loans make up 7.87% of the total outstanding U.S. student loans, according to MeasureOne.Total outstanding private student loan debt: $131.81 billion.
Private student loans work more like secured loans such as a mortgage or car loan. Every lender’s different, but here are some steps you might go through to get one:
Step 1: Shop around.
Compare it all — interest rates, payment terms and fees — to find the most cost-effective loan that suits your needs. If you cosign when you borrow a private student loan, you’ll be responsible for making all the payments on behalf of your kids. It’s potentially risky, because if you can’t pay it back, your wages can be garnished to make the debt payments.
Step 2: Gather some information.
You’ll need information like your address, Social Security number, school information, academic enrollment period, requested loan amount, employment information and more.
Step 3: Fill out the application.
Your lender may review a few things with you after you fill it out.
Step 4: It’s in the lender’s hands.
They’ll review your credit, additional information and documentation. Some lenders offer instant approval of your application.
Step 5: Choose your interest rate and repayment options.
Involve your child in this process!
Step 6: Accept the loan terms.
Don’t forget to sign electronically.
Step 7: Your lender will get verification from the college your child plans to attend.
The school will certify your eligibility and enrollment and also verify the loan amount.
Types of Private Student Loans
You can choose from three types of private loans.
Private Undergraduate Student Loans
You, the parent or cosigner, must submit credit and income proof for review. That way, the lender determines your ability to repay the loan. The lender also decides your interest rate.
Private Graduate Loans
Private graduate loans are for graduate students and have characteristics similar to other types of private student loans. Your graduate student might need you to cosign the loan due to a lack of sufficient credit. However, a graduate student with a decent credit history may also apply and qualify individually for a lower interest rate.
Private Parent Student Loans
Many private lenders offer parent loans directly to the parents who want to help a student pay for their education expenses. In this case, the student is not legally obligated to repay a parent loan.
Federal Student Loans
Federal student loans are governed and provided by the U.S. Department of Education. They have lower interest rates and flexible repayment plans for borrowers compared to private student loans.
Most student loans — about 92 percent, according to a June 2020 report by MeasureOne, an academic data firm — are owned by the U.S. Department of Education. Total federal student loan borrowers: 42.3 million. Total outstanding federal student loan debt: $1.54 trillion. Data courtesy studentaid.ed.gov
How Do Federal Student Loans Work?
A federal student loan is part of federal financial aid and is also called need-based financial aid. Confused? Check out What is need-based financial aid? for more information. Here’s how federal student loans work.
The FAFSA requires you to fill out information regarding your student’s financial status, especially about income and investments.
Step 2: Hurray! You’re done!
Once you submit the FAFSA, it’s sent to the schools your child’s interested in (you must choose them from a list on the FAFSA.
Step 3: Financial aid offices use something called your Expected Family Contribution (EFC) and cost of attendance (COA) to determine your final financial aid award.
The cost of attendance includes tuition, other required fees, room and board, textbooks and other expenses. The financial aid award may include several combinations of federal financial help such as federal Pell grants, federal loans and paid work-study jobs.
Step 4: Make some choices.
You and your child must review the details of each federal loan and accept which loans you’d like to utilize. For example, maybe you want to take a Direct Subsidized federal student loan but decide not to take a Direct Unsubsidized federal student loan (more on the differences between those two in a second).
Types of Federal Student Loans
You can categorize federal student loans into a few general types. Each of them has special characteristics, terms and qualification requirements. Let’s check them out.
Direct Subsidized Loans
Direct Subsidized loans are need-based, which means you must show need in order to qualify for them.
The federal government pays the interest on Direct Subsidized loans as long as your child is enrolled in school, for the first six months after he/she graduates and during any deferment or forbearance period.
Direct Unsubsidized Loans
Direct Unsubsidized loans are for undergraduate, graduate and professional students. Your child must pay the interest on unsubsidized loans, even while in school — the federal government does not pay the interest.
Pros and cons of Direct Unsubsidized and Direct Subsidized loans:
Pros
No credit check
A low, fixed rate of interest
Few flexible repayment plans
Prepaying the loan has no penalty
Cons
Lower loan limits
Students are required to file a new FAFSA form every year to maintain eligibility
The loan has stricter limits on usage, unlike private loans
Direct PLUS Loans
If you’re the parent of a dependent undergraduate student, you can tap into a Direct PLUS loan. PLUS loans are normally used to pay off the cost of education that other financial aid or loans do not cover. You’ll undergo a credit check to verify credit history.
The federal government caps the borrowing limit for Direct PLUS student loans. The loan amount limit may vary considering the type of loan, schooling year of your kids and whether the students are still dependent.
Differences Between Private Student Loans and Federal Student Loans
It’s important to know the basic differences between private and federal loan types. Check some of the standout differences between private student loans and federal student loans.
Eligibility Criteria
Your child can qualify for federal student loans if he or she is a U.S. citizen or eligible noncitizen and if he or she is enrolled in an approved degree or certificate program.
Your student may require a cosigner to get private loans and may have to fulfill a lender’s credit and income requirements. Your student must also enroll in an approved degree or certificate program to get a private student loan.
Interest Rates
Federal student loans carry fixed interest rates. This means the interest rate is the same for the rest of your child’s loan term, no matter how much market interest rates increase or decrease.
Unlike a federal student loan, you can choose between a fixed or variable interest rate with a private student loan. Variable interest rates may increase or decrease based on market conditions.
Grace Period
Both federal and private student loans normally allow a grace period, which means no repayment is required until another six months after your student graduates. As a parent, it’s a good idea to read the fine print on the grace period before applying for a student loan.
Repayment Plans
Federal student loans may offer you multiple, flexible repayment plans, such as an income-driven repayment plan and extended repayment plan. These plans are offered to help borrowers if they face financial hardship to afford monthly student loan bills.
You might assume that private lenders only offer one student loan option with a set interest rate and repayment terms. But this is actually not the case. Several popular banks and private financing companies offer a variety of interest rates, as well as flexible repayment plans. However, private student loan companies are not required to offer flexibility and they do not offer loan forgiveness. Loan forgiveness can be an option with federal student loans to help you pay off your debts.
Forbearance and Deferment Options
Federal student loans offer forbearance and deferment options — but what do those actually mean?
Forbearance and deferment both mean that you can postpone student loan payments when you can’t afford them. The biggest difference between the two is that forbearance always increases the amount your child owes, while deferment can be interest-free for certain types of federal loans.
Most private lenders only offer deferment programs if you’re in the military or enrolled in school.
Deferment and forbearance are the same for private student loans — interest always accrues, and your child must pay the interest.
It’s a great idea to ask private student loan lenders whether they will let you pause payments if you or your son or daughter can’t afford to pay the loan payments for a while.
The Benefits of Private Student Loans and Federal Student Loans
Private and federal student loans both offer major benefits, and the main benefit is that they help your child go to college when you or your child can’t pay the gap between scholarships, grants and tuition, room, board and fees.
Benefits of Private Student Loans
A few quick benefits of private student loans:
They help cover the gaps in your child’s financial aid award and educational costs.
They aren’t need-based, unlike Direct Subsidized loans.
Most private lenders offer both fixed and variable interest rate options and loan terms for different borrowers.
Private student loan lenders allow your child to apply with a cosigner for a better interest rate and increase your chances for loan approval.
You may be able to release yourself as a cosigner from your child’s private loans.
Your child shouldn’t have to pay penalties if he or she pays off the student loan ahead of time in the vast majority of cases.
They offer competitive interest rates for borrowers or cosigners who have a great credit score.
You can tap into various repayment options, including deferred repayment, where you make no scheduled loan payments while you’re in school and during your separation or grace period.
Benefits of Federal Student Loans
Finally, check out some of the reasons you may want to opt for a federal student loan:
You don’t have to provide your credit history to get a federal student loan.
A fixed-rate federal student loan protects your child from increases in monthly payments if the market interest rate increases.
Federal student loans also allow your child to apply for forbearance or deferment. They offer more flexible repayment options.
Borrowers can consolidate multiple federal loans under the Department of Education’s Direct program through one payment per month, and an estimated 7.37 million federal student loan borrowers are on an income-driven repayment plan.
Repayment Plan
Payment Cap
Loan Balance Forgiveness
Current Number of Borrowers on Plan
Pay As You Earn (PAYE)
10 percent of discretionary income
After 20 years
1.31 million
Revised Pay As You Earn (REPAYE)
10 percent of discretionary income
After 20 years (25 years for loans taken out for graduate study)
2.56 million
Income-Based Repayment (IBR)
10 percent of discretionary income, or 15% if loan was taken out before July 1, 2014
After 20 years (25 years for loans taken out before July 1, 2014)
2.82 million
Income-Contingent Repayment (IBR)
Lesser of 20 percent of discretionary income or the payment on a 12-year fixed-payment plan
As a parent, you support and guide your kids, and guiding them through the student loan process is no exception. Consider your options and choose the best one according to your needs and financial status.
Good luck!
Author Bio: Phil Bradford is a financial content writer and finance enthusiast with expert knowledge about personal finance. His passion for helping people who are stuck in financial problems has earned him recognition and honor in the industry. Besides writing, he loves to travel and read books.
Junior year is here! Yiiiiiiiikes! Whether you want to bury your head like an ostrich or tackle it like a linebacker, the reality is here: Two years till college starts.
As a parent, the crazy busy-ness of high school may have gotten even busier because now the time crunch descends. Between AP classes, extracurricular activities and homework every night, junior year is one of the busiest years leading up to college because your student is trying to do all the things!
You may wonder exactly what junior year should look like in terms of prepping for college. It takes planning and prep work to make junior year go as smoothly as possible! Read more for your complete college prep list for high school juniors! I’ve compiled a few things to keep top of mind with this junior year of high school checklist.
Beginning of the Year: Speak with Your Child’s School Counselor
You don’t need to call up the school counselor or college and career counselor every other week. However, it’s a great idea to speak with or meet the school counselor in person at the beginning of the year. He or she will allow you to ask questions about core subjects, already-scheduled courses and more. Make sure you talk about a healthy college prep standard for core subjects:
Four years of English
Three years of math (though four is better!)
Three years of science
Two or three years of social studies or history
Make sure your child’s college and career counselor knows what schools your child put on his list up until now (it’s okay if it changes later) so he takes courses that align well with that college’s requirements.
Don’t leave it up to the school counselor, however. It requires sleuthing on your part, too. Get on the website of the colleges your child is interested in and find out the requirements for each. Then communicate that with the school counselor so you’re all on the same page.
All Year: Grades, Grades, Graaaades
Beef up those grades. Colleges and universities want to see them whether you agree they represent your child well or not. Has COVID-19 caused your child to fall behind just a little bit? (Is it possible to learn Shakespeare over Zoom without the opportunity to talk to a teacher face-to-face? Hm….)
Keep on top of the college preparation process both during high school junior year and if your child needs help, make sure that occurs.
All Year: Get Going on Extracurricular Activities
What does your child love to do? Or maybe even more importantly, what does he really not like doing? Sometimes knowing what we don’t like to do is more important than knowing what we enjoy. It can help later on when your child makes major life decisions.
If your child hasn’t gotten super involved in extracurricular activities in high school, it’s not too late to get involved. Also, don’t forget to encourage your child to look for leadership positions within those extracurricular activities.
All Year: Talk About a College Savings Plan
Don’t have a college savings plan set up yet? No worries. You can always start one now! It’s not too late to put a plan in place even though your child’s a junior.
If you’ve already been contributing to a college savings account, discuss with your student and other family members how you’ll continue to contribute to that account. Evaluate how far the money in the account will go to pay for college. How far will your child get on the amount of money you’ve saved? Do you need more or can you pay for some of it out of pocket? How creative can you get with paying for it out-of-pocket, through side hustles and more?
Finally, have the conversation about how much it’ll cost your child out of pocket.
All Year: Talk About Colleges
What kind of school is your child thinking about? A vocational-technical school? Community college? Four-year college or the military? What do you think fits your child best? If you just know your child will perform best in a private liberal arts college but all she wants to do is look at state universities, it might require some discussion and give and take on your part.
Talk about careers but don’t focus too much on those or majors — your child will likely change her major!
Job Shadow
Let’s say your child really doesn’t know what kind of school to look into because he or she has no idea what he or she wants to do for a living. I normally don’t advocate for picking a school based on major, but let’s say your child is really interested in a trade, like welding. In this case, I advise job shadowing because it’s one of the best ways for your child to determine what type of school to choose.
On the other hand, if your child knows she’s destined for a university — she’s had her mind made up that she’s going to a four-year school — don’t worry so much about the major. Pick the school based on its own merits and opportunities and the major will follow.
All Year: Collect Information
Gather college information through college fairs, college nights and any special alumni. (Did your next-door neighbor’s child go to the No. 1 school on your child’s list? Set up some time to chat!)
Make a list of schools your child would like to visit and keep that updated. Check out my free spreadsheet for the college search!
Note a number of things on the spreadsheet, including cost, merit scholarship requirements, size, location, distance from home and more.
Fall: Help Your Child with that Resume!
Do you know a thing or two about putting together a resume? Stick to what you know, then get a professional to look at it if you’re not confident. One of the best things you can do is proofread the resume for silly mistakes like spelling errors.
Case in point: When I was an admission counselor, I’ll never forget how one kid wrote “Delivered toilet trees to the community center” on his resume instead of “toiletries.”
Don’t let your kid be the “toilet tree” kid.
Don’t forget to remind your child to add the following:
Any awards
Community service achievements
Academic accomplishments
Work details
Anything else your child participates in
Fall: Get Ready for the ACT or SAT — or Not
Does your child need to take the ACT or SAT? You and your child need to decide together whether it’s worth it to take it.
In any normal year, your high school junior would study for the ACT or SAT with gusto. You’d encourage him to start studying for the SAT/ACT and SAT subject tests as soon as the calendar turned to September.
Your best bet is to get on an email chain or get on the phone with admission counselors to help you decide whether your child needs to take one of these tests. If you decide it’s important, start studying using practice exams.
Fall: Take AP Classes
AP classes are standardized exams designed to measure how well your child mastered the content and skills of a specific AP course. Your child takes an end-of-year paper-and-pencil exam to evaluate how well he did on the test.
The benefit? Most U.S. colleges grant credit, advanced placement or both for qualifying AP scores.
Ask about International Baccalaureate, CLEP or dual enrollment courses as well.
Fall: Take the PSAT
The PSAT/NMSQT is offered in the fall. How to get ready for test day: Ask your child’s school counselor when her class will take the PSAT/NMSQT and check out a free practice test. Make sure she eats a healthy breakfast the day of the exam!
Spring: Take the AP Exams
Your child can take the AP Exams every year in May at many high schools and exam centers. Check with your school counselor to learn more.
Spring: Take the ACT or SAT — or Not
If your child elects to take the ACT or SAT or the college your child is looking into requests it, sign up for the ACT or SAT and have your child take one of those tests — not both. Shoot for anytime in the spring. There’s no reason you shouldn’t opt for April for the ACT or March for the SAT.
Spring: Plan the Senior Year Schedule
Talk with the school counselor about putting together a class schedule for senior year. Encourage your child not to take the easy way out — take classes that aren’t a cake walk during senior year, however tempting it is.
Use the website only to look up the phone number for the admission office at that school.
Call the admission office and talk to the campus visit coordinator or someone in a similar role. The campus visit coordinator schedules your visits, particularly if they’re personal campus visits, which are one-on-one visits.
Talk in detail about your options. Does your child prefer a group campus visit or a personal campus visit?
Ask about specific requests, like meeting with a specific individual on campus.
Schedule the visit and go!
All Year: Apply for Scholarships
There’s no law that says your child must wait until he’s a senior to apply for scholarships. Now’s the time to hop online or have your child ask the school counselor if he can apply for community-based scholarships.
I recommend using the Scholarship System to help your child get scholarships — it’s a comprehensive system to get judges to notice your child’s application.
The Scholarship System will give your family all the tools you need to find the perfect scholarships, create competitive applications, save tons of time on the process and actually get scholarships. Check it out! You can join for just $1!
All Year: Work on Building Those Relationships
Everyone needs to work on all relationships — with school counselors, admission counselors at colleges, teachers at school (they’ll write your child’s letters of recommendation!) and everyone else you can think of. It’s good in general to build positive relationships, so do your best to make connections with those around you and encourage your child to do the same.
Build these relationships without ulterior motives, too — “If I make friends with this scholarship official, maybe he’ll give me the scholarship…”
No, none of that!
Make genuine connections and friendships without thinking about how you and your child will benefit from the relationship with employers, coaches, activity leaders or other adults.
Be the Cheerleader
It doesn’t end after the last day of junior year — in some ways, you’re just getting started! Continue to learn more about financial aid, work on visiting more colleges over the summer and write down all deadlines for college applications, college scholarships and more. Encourage your child to apply to colleges the minute applications open — some open over the summer!
Give your child so much encouragement because your high schooler works so hard during this process (hopefully this junior year of high school checklist helps). It’s not easy, especially with so many deadlines, things to remember and different requirements for all colleges.
I welcomed a guest post fromLisa Bigelow, an award-winning content creator and mom who learned way too late how to save for college. Check out her helpful tips below!
It seems like yesterday your little bundle was born. Then came first steps, school, a driver’s license. Before you know it, you’re scouring college brochures that come in the mail by the elephant load, grinding out college tours and applications and wondering how to pay for it all.
In 1995, the average cost of a full year of tuition plus room and board at a four-year university was $10,560, according to the National Center for Education Statistics. Fast forward to 2018 and that antiquated figure blooms to an astonishing $27,357 – a near-threefold increase.
It’s safe to say that the cost of college probably isn’t coming down anytime soon. Yet even with the total tab for four years of university exceeding $100,000, for many families, the intrinsic value of higher education is unquestioned.
You know you should start saving now, but how much will you need?
It’s difficult to estimate what college will cost when the big event is far in the future. So many factors affect the cost of attendance, including eligibility for need-based aid and in-state residency, plus the promise of merit awards or private scholarships. Unfortunately, when you start saving, you won’t have the answers to any of those questions.
Nevertheless, families that plan ahead for college expenses aren’t likely to regret it. If you want to pay for four years of university education for your future collegian, here are five saving for college tips.
First things first: You need a goal. But how much?
Luckily, the College Board — the same organization that administers the SAT — offers a free future cost estimator on its website. Here, you can enter the current cost of one year of school, either public or private, and the tool will calculate the estimated cost of attendance after factoring in your timeline, estimated inflation, and other considerations.
Not sure which value to enter? Consider entering a total of one year of tuition plus room and board at your state flagship university. You can always change it later.
Step 2: Stack rewards.
Setting up a college savings plan is a great idea! Funding it, however, is a different story.
Automating contributions is helpful (and some might say critical), but don’t hesitate to think outside the box. For example, credit card rewards programs, browser add-ons and retailer programs like Upromise are fantastic ways to chip away at that big goal you set in Step One. Earn a reward, deposit it into the 529. It’s really that simple.
Step 3: Go low-tech.
Spare change stored in a water jug. Birthday and holiday gifts from Grandma deposited into your child’s 529. Yard sale proceeds put toward college tour travel costs: All great ways to capture value from otherwise overlooked — or worse yet, wasted — funds.
At the end of every month, empty your wallet, jacket pockets and car of any change and bills you find. You’ll be pleasantly surprised how much it totals — especially when combined with earned rewards. How’s that for one of the easiest but simple saving for college tips?
Step 4: Pursue private scholarships.
You’ve probably heard the rumor that millions in scholarship dollars go unawarded every year, but don’t use that as an excuse not to save for college. There are countless private scholarships that award students on the cusp of high school graduation.
Merit-based scholarships typically award money for academic, athletic or creative talents. But other types of scholarships don’t even require an essay. Have your teen peruse available scholarships like the ones on Bold.org.
Step 5: Explore regional discounts.
Don’t overlook residency discounts, as they can be worth tens of thousands of dollars per year. Some states let you pay tuition years in advance, while others award special scholarships to students in otherwise out-of-state tuition zones. In New York State, in-state residents who meet income criteria are guaranteed free tuition at in-state colleges and universities.
Bonus Tip: Weigh degree cost against future earnings.
Finally, when the time comes to make a selection, carefully evaluate the cost of your student’s degree path against likely future earnings.
Is it worth it to pay $200,000 or more for private school tuition if a public school degree will get your student the same salary after graduation? If not, it may be wise to reconsider.
Author bio: Lisa Bigelow writes for Bold and is an award-winning content creator and mom who learned way too late how to save for college. In addition to CollegeMoneyTips.com, Lisa has contributed to OnEntrepreneur, Finovate, Finance Buzz, Life and Money by Citi, MagnifyMoney, Well + Good, Smarter With Gartner and Popular Science. She lives with her family in Connecticut.
I met with hundreds of college-bound students and their families as an admission counselor.
One thing I always noticed about second-timers: Easier conversations.
Usually.
When parents had a second child going off to the same college (we had an unprecedented number of sibling pairs at our college), conversations sometimes went like this:
Me: “Did you get a good look at the residence halls?”
Student: “I stayed with my sister in her residence hall 34 times last year. We made a Jell-O tower the last time I stayed.”
Me: “A Jell-O tower?”
Student: “Yep, that’s why she had to scrub the lounge. You know, because the whole thing exploded from the vinegar.”
Parent: Rolls eyes. “Let me get you a check for the deposit. Let me see, if I remember correctly, that’s $200, right?”
Me, still with a million questions about the residence hall lounge Jell-O/vinegar volcano, checking the time: “Do you guys have any questions? You’ve only been here for 15 minutes.”
Student: “No, I’m good.”
(I know, this conversation was borderline ridiculous.)
At any rate, when you’re going through the college search for the first time, it’s daunting. It’s like looking into the end of one of those pool noodles (you can’t quite see the light at the end). You may worry, have a million questions, convinced you’re not sure what you’re doing when your first child heads off to college.
Here’s what you can do to lighten your mental load.
Your child might think you’re there to slloooowly give her signs of a stroke when you’re on college visits. You pester the admission counselor, the dean of admission, the professors, the security personnel. You make best friends with Clara, the cleaning professional in the all-female residence hall and vow to get in on the jazz professor’s next gig — as the drummer.
You’re just doing your job as the first-time parent. If you have another child, you’ll barely utter a peep the second time around.
Your second-born will say, “Mom, the admission counselor just asked if you have any questions. Can you take your sunglasses off and uh… look like you’re into this?”
Ha!
All jesting aside, check out my overly long list of questions if you’re not sure what to ask: 202 questions to ask on a college tour… (Too many? I’m so sorry.)
2. Visit campuses.
You know you need to visit campuses, but where should you go and when? A lot depends on your student. Some sophomores are nowhere near ready to visit colleges and others are. It depends on maturity level, drive, etc. Gauge your student’s readiness. Even if you’re ready for a full tour of New England colleges, your child may not give a toot. At all.
Trust me — I’ve seen the kids who aren’t ready for college visits! They act just like you imagine they would.
Once you figure out when, you need to determine where. “Where?” is a fun — and stressful — question because you have so many choices. Big? Small? Four years? Trade school? Parents’ alma mater? In state? Out of state?
You don’t know until you start visiting. There are no rules here. Just pick a school your child’s interested in and go. Simple as that.
3. Meet the people.
Really get to know the people. Not just the students. Not just the admission staff. Everyone. While there’s no way you can meet all 10,000 people on campus, you should be able to get a feel of what the campus means to the people you do meet. Try to get people to say, “I wish campus offered X…” or “I love X about our campus.”
Find out whether students love the things that matter — the relationships they develop or the opportunities they’ve been given. If all they can talk about are the beautiful buildings, the rad parties they attend or other surface-level stuff, it might be a red flag.
4. Get organized.
You may have no idea what you need to organize when you’ve got your first child going to college. Here’s a spreadsheet I put together — without the fluff you don’t need to know.
You can copy that spreadsheet and save it for yourself. It’s definitely nothing fancy but is super functional. It includes things like distance from home, tuition and fees and heart/gut test (feelings after the visit). Encourage your child to maintain this sheet.
5. Activate the heart/gut test after every visit.
As I alluded to in the previous point, you need to make sure your child “takes” the heart/gut test. The heart/gut test is not really actually a straightforward test. It’s actually a litmus test for how your child “feels” about the college search. You can ask a few questions to probe a little bit for how your child feels about a college. Ask:
How did you feel when you were on campus?
Can you see yourself going to college here?
How do you feel about the students/professors/admission staff, etc.?
What was your gut/heart initial reaction to this college?
As you can imagine, this is a little unnerving for some people. It takes out the facts — how many students get a job after graduation, successful alumni, internship stats — and puts feelings front and center.
But it’s so good when you get it right.
6. Talk, talk, talk, talk, talk about money.
Talk about money until you get a scratchy throat. Of course you have lots of questions about money. How much will each school cost? How much merit aid does a college offer? What scholarships can my child receive from searches? (By the way, check out the Scholarship System for the best way to look for scholarships that I’ve found anywhere!)
Here’s what you want to find out from every college your child’s interested in:
The amount of merit aid he or she will receive from that college.
Whether your child can apply for other scholarships.
Don’t forget to talk about how much you can reasonably afford to help your child pay for college. You don’t want your child to have unrealistic expectations about what you’ll be able to help pay. (Imagine that your child thinks you’ll pay for the whole thing — but you can’t. It might be a nasty shock when your student tallies up the loans for her first year alone!)
7. Avoid talking too much about major.
Whaaa?
Yes.
Here’s a quick fact: Three out of every four students enter college undecided or change their major at least once.
You may already know that. But that still might not stop you from searching the internet for “best colleges for pre-optometry” or “best pre-med universities.”
A true story about a past student of mine: Jessica began looking at colleges as a junior in high school. She knew she wanted to be a pre-med major. In fact, she was so determined to be a pediatrician that she even shadowed her own pediatrician. Jessica chose her college (in this case, a large state university) based on the university’s high percentage of undergraduates who got into medical school.
Guess what happened. Jessica started taking biology and chemistry classes and realized it wasn’t at all what she’d expected. In fact, she realized she didn’t even like the school she’d chosen at all. She ended up transferring and switched her major to marketing instead.
About three quarters of all college students change their major plans at least once. Your student will most likely change his major (because he either discovers something new or learns that he’s not well-suited for his initial choice). So don’t go into the search on a mission to find the best school for the best [insert major].
It’s easy to ask college reps, “Can I major in X at your school?”
It’s much more difficult to ask other, less-defined questions, like “What does it feel like to be a student on campus?” (See heart/gut test.)
8. Don’t spend too much time looking over your shoulder.
If your next-door neighbor already applied to 36 colleges and your child thinks he’s good with two college applications, don’t compare. What’s right for neighbor Billy Bob may not be right for your child at all.
If you’re struggling to file the FAFSA but your neighbor Mary filled it out in two seconds flat, relax. As long as you meet required deadlines for each college your child’s interested in, you’re doing great. And if you need help, get it.
9. Check college’s requirements — then follow the deadlines.
All the different requirements and deadlines at schools can slowly drive you crazy if you let it happen. One school may have a November 1 application deadline. Another school has a scholarship interview deadline in February. Grab my spreadsheet and make sure you clearly denote each deadline. Put your head down, get your child on board and meet the deadlines of all the colleges on your list. Make sure you ask about:
CSS Profile deadlines (usually only required at more competitive schools)
Application deadlines
Scholarship deadlines
Testing requirements for the ACT and SAT (many schools don’t require them now) — and find out whether your child needs to do the written essays or the SAT subject tests
Deadlines and requirements for letters of recommendation
Resume requirements
Deadlines for final transcripts
10. Follow up.
Make sure colleges get your child’s transcripts, test scores, recommendation letters and other requirements. It’s a good idea to make sure your child’s file is complete well before deadlines approach.
Don’t skip this step. There’s nothing worse than thinking everything’s ready to go, then realizing with horror that something didn’t get turned in on time.
Check a month before everything’s due if it’s feasible. That way, your child has plenty of time to submit transcripts or scramble for another recommendation if needed.
11. Consider revisiting.
Did your child not feel the heart/gut test magic the first time around? That’s normal.
Sometimes your child just needs a second visit, particularly if it’s been a year or more since your family made the trek to a particular college.
Keep going till your child can see himself going to a particular school and can envision success there as well.
12. Talk about your insecurities.
It’s okay to feel like you don’t know what you’re doing. Isn’t it like that the first time you do something new, no matter what it is? Think about the first time you booted up the internet. The first time you drove a car. The first time you went off to college yourself. Learning about the college search is an involved process. Luckily, I’ve created a timeline and checklist that explains exactly what you’ll need to do at any step in the college search, called the Grab ‘n Go Timeline and Checklist for the College Search. Check it out!
First Child Going to College? You’ll Get There!
You really will get there. The entire process may feel as foreign as learning how to drive on snow when you’re from Florida (and maybe this will actually happen if your kid’s looking at colleges in, say, North Dakota!) but the good news is there’s no one way to complete the college search.
The former president of my alma mater and the college I worked for always told a story about his daughter’s overnight visit at his alma mater, the Air Force Academy. He dropped her off, glowing because he knew she knew what to look for in a college.
The daughter he picked up the next day, he always said in his speeches, “Was not the same daughter I’d dropped off.”
She was quiet on the car ride home. Toward the end, she burst out, “Dad, I don’t want to go to the Air Force Academy.”
Our former president always said his daughter aced the Heart/Gut Test. If she’d chosen to go to the Air Force Academy just to make her dad happy, she knew that it’d be a long, miserable four years.
Our former president truly believed that when you know deep down that it feels right, it is.
But. What about when you hear someone say this, or read quotes like this?
“You should never ignore your gut. But you should know when to rely on that gut instinct and when to safeguard against it.”
It’s harder to grasp a completely intuitive approach to the college decision. As humans, we want to make sure the decision is logical:
A pros and cons list.
Evidence of oodles of successful alumni.
Statistics and proof.
But the college decision doesn’t always come down to a pros and cons list.
Why’s finding the best fit so important? Let’s dive into a couple of scenarios to illustrate why.
SCENARIO A
Your kid does a diligent job of choosing a college. He carefully examines what he wants, visits collegesand scrutinizes every angle of the decision. Your son employs the heart test and gut test to his advantage.
He definitely chooses the best fit for him. Your son thrives! He gets involved in activities, picks a major that is quite possibly the best match that ever existed. He adds a few mentors to his list and finds best friends for life.
Your child happily graduates from said college and gets a great job and/or goes off to his No. 1 choice dental school (or whatever graduate school). Beautiful happy ending. You sob happily at alllll the graduations.
SCENARIO B
Your kid doesn’t really engage in the college search — you can’t get him to move off the couch.
He chooses a college. Not the best match in history, because it’s pretty expensive and that creates some angst. You’re paying a whopping amount because, due to his inability to get off the couch, he didn’t apply for scholarships.
He doesn’t really apply himself. But TBH, it actually ends up going okay. His grades? He manages to squeak through! Graduation? Ditto! He says, “I’m just not a school person, Mom.” He manages to gather tons of friends along the way.
He gets a great job after graduation and eventually becomes the CEO of a Fortune 500 company. You know, he’s one of those really successful people whose teachers said he would end up as a ditch digger. Like Walt Disney.
Truth be told, you’re just as surprised as all his poor professors. You should have known, looking back. As a kid, he showed up at Boy Scout Camp and ended up leading all the activities — not the Boy Scout leaders.
SCENARIO C
Your daughter (just to shake it up a little) adamantly decides to go to a college based on where her boyfriend’s gonna go. (I can’t tell you how much I despised reason as an admission counselor.)
She breaks up with said boyfriend and melts down in a puddle of existential crisis halfway through first semester. She’s six hours away, in a school that’s way too big (or way too small) or whatever. Needless to say, it’s not a Baby Bear fit. You encourage her to stick it out for at least another semester.
Your daughter transfers out after the first semester, anyway, vowing never to see Bad Brad the Boyfriend ever again. She loses credits due to her terrible grades and in all actuality, must start over. She’s back at square one.
She is actually unhappy at her second institution, too. She transfers again. Classes don’t transfer. By this point, she might as well still claim freshman status in college, even though she should have been at least a second-semester sophomore. Ugh. She graduates late, with more debt than she should have.
There are plenty more permutations than what I’ve covered above. And guess what? I knew a student that fit every one of these descriptions.
The process boils down to:
GUT TEST->HEART TEST->CHOOSING THE RIGHT SCHOOL->GREATER CHANCE OF GRADUATING ON TIME.
Now, did I say “greater chance of success in life” or “instant fame and fortune”?
No. Just “greater chance of graduating on time.”
Even so, that’s a big accomplishment.
Just remember, everything you can do to prepare for the heart test, gut test and ultimately, the college experience, will help your child attain the direct route to the best experience possible.
How to make sure that happens? Well, when everything strikes the right notes with your child, the diploma almost writes itself!
These things will help you accomplish all of this.
1. Visit the Campus.
Get geared up for your 16th masked campus visit: (“Yep, this is what we do now: Not breathe…”) or amp yourself up for your first non-breathing expedition.
Your kiddo can’t successfully ace the heart or gut test without stepping foot on campus.
2. Meet the People.
I know, this sounds so obvious. Duh — you want you kiddo to meet the people on campus. You meet the tour guide, right. Check.
But no, I mean really get to know the people. Ask them their whole life story. Ask them what they thought about their chosen profession as kindergarteners.
Don’t ask cursory questions like, “Do you eat every meal in the dining hall?”
Not only is that boring, it doesn’t get to the root, the heart, the real guts of the kid. Hey, the heart! The guts.
Katie effervesced. She was a tour guide on our campus and was so bubbly that I think she floated on bubbles. She was everyone’s friend and pretty much told her life story from the ground up to everyone — on every tour.
But the thing was, she wasn’t annoying. She was wonderful. Parents loved her. Every student wanted to be her friend. I think it’s because she was so real.
Encourage your student to talk to everyone in the real-est sense.
Not every tour guide can be a Katie, but seek out the Katies wherever you are on campus and whether that person’s your tour guide or not. It’s a win for all.
And don’t neglect the Katies who are librarians, admission counselors, professors, the list goes on! Talk to everyone.
My alma mater’s best ambassador works in the alumni and advancement office. She’s also the wife of one of our most popular biology professors. She’s effervesces, too.
Meet the people who effervesce.
3. Keep Semi-Quiet.
Shssshshh. Mom and dad. You’ve got to shhhhh.
Your child is trying to figure out his way.
Oh, gosh, I know I encouraged you to ask a billion questions on the college visit. But you must be quiet and kinda let your child come to you.
I’ve learned from experience that when parents try to push their opinions on their kids, it sometimes backfires. “I loved our visit at College ABC, didn’t you?” One parent says.
“I loathed College ABC. I hate its colors [or other ridiculous reason].” Says the kid.
Sometimes they might pick the school you love (yes, with the Katies!) if you don’t project too much.
Of course, this all depends on your kids’ personality.
On the other hand, if you’ve got a pretty compliant kid, you might get away with a little more effusiveness. Kids are hard, I know! Gah!
4. Talk About the Ol’ Rumbly Gut Feeling.
It’s okay to have an instinct that doesn’t make much sense. Encourage your kid to feel that. Talk about the Heart Test/Gut Test and make it a true part of the experience.
It’s kinda like picking your spouse or partner. Did you make pros and cons list as to whether you should marry him or her?
Nah, you went with your gut. Or at least, I hope you did.
Who says the college decision shouldn’t at least be somewhat about that, too?
Listen to the Heart/Gut
Now, I hear ya. You’re asking, “What if my kid doesn’t feel the effervescence? The falling in love? The ‘Yep, this is where I’m supposed to go?’”
As hard as it is to hear, your search might not be over. Or maybe you need to start a new search now that you know what to look for in a college.
How do you help your child find the right college fit in October?
The college search is a process. It’s not like your child can usually apply, visit, get accepted and plunk down a deposit all in the same month. (If you can do that, my hat’s off to you! — Ha!)
Again, it’s a twisty road with lots of checkpoints along the way.
Senior parents, here’s what you need to know about how to look for colleges in October. (By the way, this is great information even for those parents who aren’t parents of seniors!)
The FAFSA opened on October 1 and now’s the time to fill it out.
The FAFSA stands for Free Application for Federal Student Aid. Colleges and universities use the FAFSA to consider your child for federal student aid. States and individual colleges and universities also use the FAFSA to award grants, scholarships and loans.
File the FAFSA as soon as possible — for federal aid, you must submit the FAFSA by 11:59 p.m. Central time (CT) on June 30, 2022.
Does that mean you get to veg out till June 29?
No!
Because colleges also carry deadlines. Check with the college(s) your child’s interested in attending to understand their exact application deadlines.
2. Encourage your child to work on applications in advance — not at the last minute.
Most colleges evaluate regular applications between January through March. However, you’ll unearth a few different deadlines for specific admission types.
For example, early action and early decision applications require students to submit their materials well before the new year. Application deadlines show up during the — you guessed it — fall months! You might see a few mid-October through November deadlines at colleges that have an early action or early decision process.
Check — and double check — the admission deadlines for each college your child plans to apply. Even if the college uses rolling admission, it’s best to apply early so you know where your child stands in terms of merit-based scholarships and other financial aid early on.
3. Check out various other deadlines for specific colleges.
Your high schooler may not be done with just an application. You may uncover a few other dates to keep track of:
Additional deadlines for honors programs
More applications or deadlines for scholarships and financial aid
How to keep track of it all? Create an online calendar or spreadsheet to plan campus visits so you don’t — gasp! — miss key application dates for scholarships or financial aid.
4. Note ACT/SAT Adjustments
Does your student plan to take the ACT or SAT? Do a quick study on the latest testing information. Will the test be offered where your child normally planned to take it? What are the COVID-19 requirements?
If testing is not available in your area or you don’t meet the safety requirements, know that many schools have gone test optional.
Note: Even if your child’s a senior, it’s not too late to take one of these tests.
5. Start Narrowing Your College List
Your child can only go to one school, right? Time to start narrowing the list! Ask your child a few questions to get closer to a decision:
Do you want or need to be closer to home? (Colleges close by may not have popped up on your kiddo’s radar before!)
Do you think you prefer a small liberal arts college or a large university?
Would you prefer a large city, suburban area, rural community, etc.?
Do you think you want community college first?
Are you interested in going to a school that’s currently all online?
Are you comfortable with some loans?
How hard do you want to work for scholarships if schools don’t offer much merit-based aid?
What do you think you might major in during college?
What types of extracurricular activities would you like to participate in?
Next, divide schools into “safety,” “match” and “reach” schools based on the admission criteria at each school:
Safety: A safety school means that based on a school’s admission criteria, it’s likely that your child’s academic credentials are way above the average incoming freshman range. A lot of people call this school a “back-up.” It’s a good idea to make sure your child can proudly say, “I’m okay with attending my safety school” — just in case.
Match: A match school is one that your child is likely to get into based on a particular school’s admission criteria. Your child is likely to be admitted because his or her academic credentials are well within the average incoming freshman’s range. In other words, it’s more likely that your child will attend this school.
Reach: A reach school is not a guaranteed shoo-in. Encourage your child to choose a school that’s not a complete pipe dream (your child can’t apply to Harvard with a 2.5 grade point average, for example).
Feel like you’re constantly bombarding your child with questions and all you get in return is “I don’t know!” or something along those lines? Remember, your child may not know the answer to some of these questions — this may be the first huge decision he’s ever made.
Elicit help from a guidance counselor, admission counselor or another individual you trust to help guide him through this experience.
6. Start Applying for Outside Scholarships
Outside scholarships include private scholarships and cash awards. Encourage your child to go for those $100 scholarships — they add up.
Go to area high schools and collect programs dating back up to four years ago. You can find the names of scholarships on that list, Google them and then BAM! Your kid’s got lots of local scholarships at her disposal.
Contact various civic organizations in town, like the Elks club or Kiwanis club. They usually give away lots of scholarships.
What types of scholarships does your company offer? Do other family members work for companies that offer scholarships as well?
Ask your child about scholarship announcements at school. Ask for an email copy of these announcements, if possible, or ask where you can find them online.
Check social media. Join Facebook groups or other social media groups that post scholarships. All it takes is a simple search!
Look at scholarship search engines. Google “scholarships for writers,” for example. Use keywords to your advantage!
If your child doesn’t look like a match for a specific scholarship, reach out to the scholarship committee and ask if your child can apply anyway. Maybe he’s just missing one tiny requirement.
I urge you to check out Scholarship System’s free webinar. Jocelyn of the Scholarship System is amazing — she’s turned getting scholarships into a complete system. She knows how to streamline the process so your child gets scholarship results.
7. Attend Virtual College Fairs
As a result of the COVID-19 pandemic, NACAC has canceled all Fall 2020 in-person fairs and pivoted to virtual programming. Find out details about 2020 Fall Virtual College Fairs. If you’re wondering how to look for colleges, this is a great place to start because your child can learn a lot about colleges from all over the U.S. from a comfy, squashy chair!
8. Visit Schools
Visit, visit, visit. I can’t stress the importance visiting schools. How to schedule a college visit?
Talk over the type of visit your child wants. Talk to your child before you jump on the phone or set up a campus visit. What does your child want to get out of the visit? Does she want to meet with a faculty member or does that idea terrify her? Does she want what I call the “drive-by” experience — just tour and admission counselor?
Call the admission office of a college or university. I heavily suggest calling the campus visit coordinator at that college or university instead of signing up online. It’s always better to talk to a live person. A computer can’t hear you talking about your child’s interest in biology, but a campus visit coordinator can — and can offer a one-on-one meeting with a biology major or professor.
Understand your visit options. What are the options? Let’s say you want to visit on a specific date. Maybe the admission office isn’t doing personal campus visits that day — maybe there’s a group campus visit day.
Consider a personal campus visit. This is my very favorite type of visit option! I love personal campus visits because they allow you and your child to do a visit that fits your child’s exact interests. It’s personalized! You can visit with anyone in the college you need to (professor, coach, student, etc.)
Visit in person. I know it’s tempting to do a Zoom visit, but while Zoom is wonderful, it can’t take the place of an in-person visit.
Above All Else — Check In!
Take the temperature. How’s your child feeling about the process? It’s easy to become so absorbed in checking all the boxes and forget how your child feels. Start having those heart-to-heart chats!
I asked the founder of MeritMore to contribute to this post and I was super excited when Neeta Vallab responded with an enthusiastic, “Yes!” Check out her first-hand insights on merit-based aid. Here’s her story.
Two years ago, my daughter started her college admissions process. She had worked hard throughout high school, managing to have both good grades and a good social life. Our family was excited for her — our firstborn was going off to college! She was responsible for taking standardized tests, researching schools for her list, writing essays, getting recommendation letters and submitting applications.
She was responsible for the nitty-gritty parts of the process.
Early on, we learned that we are a “donut-hole” family — we make too much to qualify for need-based aid but not enough to pay sticker price.Even with our 529 plan, the cost of schools on our daughter’s shortlist was staggering. A public four-year college is as much as $22,000 per year.
A private four-year college would set us back a whopping $50,000 or more per year, and that’s just for tuition. We’d have to tack on another $20,000 for housing. It’s no surprise that 69 percent of students took out student loans in 2019.
How were we going to pay for college without taking on outsized loan debt?
Merit aid was our answer.
What is Merit Aid?
Merit aid: Why is it a big deal? Why should parents want their children to get merit-based aid?
The largest pool of “non-loan” and “non-need based” money available is merit aid. Colleges use merit aid scholarships to entice students who can boost the college’s applicant stats, which in turn improves their national rankings. Over $8 billion in merit aid is distributed annually by colleges.
Putting strong merit aid schools on your child’s shortlist is a great strategy for middle-class families to reduce college expenses and decrease the need for taking out loans. You don’t have to pay back merit aid. In most cases, grants are renewable if a certain GPA is maintained. Most importantly, merit aid scholarships are also awarded to students who qualify for need-based financial aid.
How Does Merit-Based Aid Work?
Merit aid scholarships are usually awarded to students in the top 25 percent of a college’s most recently admitted freshman class. These scholarships are mostly extended to students who show academic excellence, but merit aid is also awarded to students who are significantly accomplished in music, art or athletics. There is no separate application process for merit aid and awards are typically announced in your admission letter.
Do All Colleges Offer Merit-Based Aid?
Ivy League schools and other top-tier schools like Stanford and MIT, among others, won’t offer merit aid to their students. Small liberal arts schools are typically the most generous with merit aid awards and state institutions generally have the least merit aid to award. Since many schools offer merit aid, you don’t have to have perfect standardized test scores or straight A’s to get it. Each school will have a different top 25 percent statistic and different criteria for awarding merit grants.
How Do You Find Merit-Based Aid?
You’ll have to go directly to the website of each college you’re interested in to find its common data set. Once you find it, you can apply each school’s top quartile data for your standardized test scores, but not for your GPA.
A merit aid search tool called MeritMore takes your GPA (and standardized test scores if you have them) to generate a list of your strongest merit aid matches (schools where you’re in the top quartile), as well as good schools for you to consider (schools where your quantitatively above average). You can thencompare average merit aid amounts for the schools on the list and, if you need to, restrict your applications to the schools that will most likely give you significant merit aid.
Secret 1: Make sure your child has strong merit aid schools on his or her list.
The best way to get merit aid is to put strong merit aid schools on your list early on in the admissions process. It’s painful for both parent and student to realize that even though you’ve been accepted, you can’t afford to go.
Secret 2: Prioritize financially fit schools over name-brand colleges.
Dream schools can quickly turn into financial nightmares. Make sure your shortlist is populated with generous merit aid colleges, especially if you need funds for more than just out-of-pocket expenses.
Secret 3: Fill out the FAFSA.
Even if you don’t qualify for need-based financial aid, filling out the FAFSA is a must. Many schools need a completed FAFSA for to get full consideration for merit aid. Remember, merit aid can be awarded on top of need-based financial aid.
Secret 4: Stay open-minded.
Many generous merit aid schools may not be on your radar. Be willing to thoughtfully consider strong merit aid schools that meet most, if not all, of your child’s criteria. When you search for merit aid using MeritMore, you could discover your “perfect fit” college in the list of your merit matches.
Secret 5: Compare your merit offers and prepare to negotiate.
Your merit aid award will likely be included in your admission letter. If you’re accepted to multiple schools, compare your offers and don’t hesitate to call your top choice if the merit aid offer is lower than merit aid offers you received from other schools.
Help Your Child Get Merit-Based Aid
After recovering from sticker price shock, we sat down with our daughter and candidly discussed our financial picture relative to the schools she was applying to. We realized that several schools on her list gave very little merit aid. Even if she was accepted, we would be on the hook for paying almost sticker price. Finding and applying to generous merit aid schools was the best strategy for a middle-class family like ours to make college more affordable.
My daughter added two schools that were likely to offer her a significant merit aid award to her shortlist and deleted two schools that historically awarded much smaller amounts. Her final shortlist was balanced both in terms of acceptance probability and financial fitness.
About Neeta Vallab
Neeta Vallab is a digital platform expert and a New York City public school parent. Frustrated with the lack of tools and data available for parents with college-bound students, she founded MeritMore, a free online tool to help parents find merit aid and navigate the admissions process.
The Free Application for Federal Student Aid (FAFSA) gives you major access to scholarships and aid. You can file the FAFSA starting on October 1 of your child’s senior year. The first thing you need to do is get an FSA ID for both you and your student.
You can choose any of these methods to file a FAFSA form:
Get a print-out of the FAFSA PDF by calling us at 1-800-4-FED-AID (1-800-433-3243) or 334-523-2691 (TTY for the deaf or hard of hearing 1-800-730-8913). You can mail it in instead.
The FAFSA qualifies you for not only federal student aid, the FAFSA is used to determine your eligibility for certain state and college and university financial aid. Your FAFSA information is shared with the colleges and/or career schools you list on the FAFSA.
2. File the CSS Profile.
What’s the CSS Profile?
It’s one of the best ways you can get aid for college. The College Scholarship Service (CSS) Profile is a private independent survey you fill out through a nonprofit organization, the College Board. Nearly 400 universities rely on the CSS Profile to award your kid scholarships and other non-federal financial aid.
What does your child get from filing the CSS Profile? The application could help your child secure institutional scholarships as well as grants or student loans from the federal government.
What colleges accept the CSS Profile?
Great question. Check out the list of participating colleges and universities. The list includes colleges and universities that use CSS Profile as part of their financial aid processes for some or all of their financial aid applicants. Check schools’ websites or contact the institution’s financial aid office for more information.
Unlike the FAFSA, which is free, It costs $25 for the application and one report to a school. You’ll pay $16 for each additional report.
The CSS Profile gathers information about your family’s annual income as well as medical expenses and anything else that could affect your ability to pay for college — it takes a deeper dive into families’ finances than the FAFSA.
Note: Divorced parents must complete the CSS profile separately.
3. Explore your options for merit aid.
You’ll run into a lot of myths about aid. Let’s take a machete to these harmful myths:
My kid has to be a genius to get money from a college or university.
Students must be incredible athletes to receive money.
It takes an exhaustive search of scholarships don’t have to look any further than the college or university your child is looking into.
Did you know that there’s unlimited merit aid from schools around the country? Merit-based aid is aid not based on financial need. Instead, it’s based on items like grade point average, test scores and specific talents.
Let’s look at one school for an example. I’m going to adopt my cousin’s alma mater, St. Olaf, for a second, and show you the merit-based scholarships available there:
The Buntrock Scholarship (a renewable award of $25,000 per year) recognizes students with outstanding academic accomplishment and exemplary achievement across many facets of the high school experience.
The Presidential Scholarship (a renewable award of $23,000 per year) recognizes salutary academic achievement.
The Dean’s Scholarship (a renewable award of $21,000 per year) recognizes a strong and sustained academic achievement.
The Faculty Scholarship (a renewable award of $19,000 per year) recognizes a balanced record of consistent academic achievement.
The St. Olaf Scholarship (a renewable award of $17,000 per year) recognizes academic achievement.
What would your child have to do to get these scholarships? Fill out the Common Application and include test scores, high school transcripts and letters of recommendation.
Simple.
As you can imagine, the highest scholarship amounts get offered to top students, but the lower-tier GPA and scores still get merit scholarships. As you can see, the “lower” tier totals $17,000 per year for four years.
That’s still a whopping $68,000 over four years for the lower-tier scholarships.
My point? Find out what your child can get for merit-based aid. Merit-based aid is also awarded to students who qualify for need-based financial aid.
4. Apply for outside scholarships.
Outside scholarships include private scholarships and cash awards. Encourage your child to go for those $100 scholarships — they add up.
Ask area high schools for graduation programs dating back up to four years ago. You can find the names of scholarships, Google them and ta-dah! Your kid’s got an abundance of choices.
Contact various civic organizations. Is your next-door neighbor a Kiwanis member? Your co-worker’s husband on the zoo board?
Talk to the company you work for. What types of scholarships does your company offer? Your partner’s? Your sister’s?
Scour emails from the guidance office. Gone are the days when a printed-out list of scholarships came from the guidance office. Unfortunately, it’s much more fleeting than that. Your child could see it on an email — then, blip — it’s gone. Ask for an email copy of these announcements, if possible.
Check social media. Social media is a great place to search for scholarships. You might join any number of Facebook groups or other social media groups that post scholarships. You can do a simple search and find scholarship groups.
Look at scholarship search engines. (I know, groan. When I was an admission counselor and offered this idea to parents, they always groaned, “There’s so many, they’re all competitive, they’re all national scholarships open to thousands of kids.”)
Don’t hastily dismiss! I suggest Googling “scholarships for writers,” for example. Use keywords to your advantage! And if your child doesn’t look like a match for a specific scholarship, reach out to the scholarship committee and ask if your child can apply anyway. Maybe he’s just missing one tiny requirement.
Also, encourage your child to continue to apply for outside scholarships throughout college. You can find so many scholarships even while your student’s knee-deep in scholarships.
Check out the Scholarship System’s free webinar. It details absolutely everything you need to know about how to track down scholarships — and win them. Jocelyn of the Scholarship System totally impresses me because she’s turned getting scholarships into a complete system. She knows how to streamline the process and get rid of waste completely. She’s the bomb!
5. Ask department heads about scholarships.
Yes! Don’t shy away from asking academic departments at schools about scholarships. Here’s how this can work:
“Dr. Fletcher, you’ve been a biology professor here at X College since 1975. You’ve got to know about some excellent scholarships in your department.”
“Why, as a matter of fact, we have three options for incoming freshmen.”
“One that would apply to my child’s deepening interest in European water voles?”
“Yes! How marvelous is this? My graduate research dabbled in voles.”
“What can we do to apply?”
“Here’s what you need to do…”
So, how can you do this if you’re not able to meet with professors in person?
Email is splendid. Communicate with these people! Build relationships! Do your best to communicate with these influential individuals ahead of time so you start to build relationships.
6. Pay for it on your own.
Remember how I mentioned that paying for college is a giant jigsaw puzzle? It’s also a subtraction problem.
Take the total cost and subtract small bits at a time to get your out-of-pocket cost at the end. It could look like this. (Note: these numbers are completely made up and geared more toward private college costs):
Total cost: $60,000
Merit-based Scholarships: $20,000
Grants: $2,000
Work-study: $2,000
Federal subsidized loan: $3,500
Federal unsubsidized loan: $2,000
Total out-of-pocket cost: $30,500
Outside scholarships: $10,000
New out-of-pocket cost: $20,500
See how we subtracted, subtracted, subtracted from that total cost to arrive at an out-of-pocket cost?
Check out the next part to see how you can further take that $20,500 and break it down.
7. Use a tuition payment plan.
Many people underestimate a tuition payment plan — or don’t know about it in the first place. You pay for college using your own money, but break it up into monthly payments.
Let’s take that $20,500 from above and break it into a 10-month payment plan.
Breaking it into a 10-month payment plan means you’ll pay $2,050 per month.
Check out the beauty of the next section!
8. Get creative.
Next, how can you get creative to pay for that $2,050 per month? Can you ask other people to pitch in — both sets of grandparents, your child (think work-study, summer earnings) and maybe an aunt or uncle want to help.
See, what usually happens is most people fixate on the $20,050 and can’t get beyond it. (Trust me, I saw it happen all the time in the admission office.)
Or, figure out what one person will pay you to do for $10. Then, do that 10 more times.
Am I advocating for a side hustle? Maybe! But this really could be an idea for more than a side hustle. It could be your full-time job, if that’s your passion. Save for college by making more money (it’s how I save for my own kids’ 529 plans). Ask yourself this question: What would someone pay you $10 to do?
What do you do better than everyone else? Cook fried chicken? Babysit? Walk chihuahuas? Write goofy ad copy?
Do that one thing for that person, then do it 10 more times. Then do it again 10 more times. Maybe you’ll need to get help from others to help you! To be honest, it doesn’t matter what it is as long as it generates recurring income.
In general, it’s a simple way to think about how you could leverage your passions and talents to save for college. Then stuff the money you make into an ESA, 529 or custodial account.
Instead, take the break-it-down approach!
9. Have your child take out loans.
Okay, this may not be what you had in mind when you Googled “ways to get college paid for”… but you know what? It’s still a way to pay for college.
Loans have their place, and while you probably don’t want your child to take out loans for the full cost of his entire four (or more!) years of college, you can still strategize to figure out how loans fit into the jigsaw puzzle of the full financial aid picture.
In other words, if your child must take out loans, do it as conservatively as possible, in this order:
Take out federal loans.
Round out as much as you can with your own money.
Take out private loans as necessary.
10. Use life insurance.
This is a slightly more morbid way to handle paying for college because you and your spouse must die in order to get it. I know. I hesitated to stick this in here but today is the second anniversary of my father-in-law’s death and I decided to mention it.
If his kids had been in college when he died, my mother-in-law could have relied on his life insurance to pay for college.
I sincerely believed that during COVID-19, I’d avoid the crowds and opt for a no-exam life insurance policy. You can get a quote from Bestow and get coverage from $50,000 to $1,000,000. Choose from 10- and 20-year terms built to suit your needs.
The busy-as-a-squirrel retirement saver in me squeaks just a little bit when I suggest this option. It kind of feels like trying to say something while having my finger smashed in a drawer.
Why?
Because I really, really believe you must take care of your own retirement first before you worry about paying for college.
However, there’s no denying it: You can use your Roth IRA for both retirement and college tuition. You won’t pay withdrawal penalties with IRAs, including Roth IRAs, if the funds are used for qualified educational expenses — tuition, fees, books and room and board.
For most folks who are sending their kids off to college, only the contribution portions of their Roth IRA balances can be withdrawn tax-free. (Any earnings in the account will be taxable for those people under 59, as well as for those over 59½ who haven’t held the Roth for at least five years.)
But Roth IRAs enjoy a somewhat unique tax treatment. Withdrawals are treated as a “return of contribution” first and as earnings second.
Uh… English, please.
No problem. So, what this means is that if you’ve been contributing $4,000 per year for the past five years, you can withdraw $20,000 tax-free (as long as you use the money for tuition, fees, room, board, etc.)
What happens if your withdrawals exceed your total contributions?
They’ll be taxable for those under age 59½.
Just remember, always take care of yourself first. You can always borrow for college but you can’t borrow for retirement. If you’re a little thin on the retirement funds, be a busy squirrel and keep contributing to your Roth IRA!
Ways to Get College Paid for in Action
Don’t limit yourself or your child. So much goes into the process of learning how to pay for college.
Also — one more thing. Don’t stop figuring it out. Ever. This isn’t a process you quit as soon as your child is safely secured in his or her residence hall room on the first day of college. Keep looking for scholarships, keep side hustling, keep finding ways to make college work.
